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Space: The Final Travel Commerce Frontier

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“Space: the final frontier. These are the voyages of the Starship Enterprise. Its continuing mission: to explore strange new worlds, to seek out new life and new civilizations, to boldly go where no one has gone before.”

– Gene Roddenberry

If Helen of Troy had a face that launched a thousand ships, then Gene Roddenberry had the pen that launched a thousand ships. Or perhaps it was a typewriter.  The point is that those words were the starting point of every episode of original “Star Trek” and more or less outlined what happened in every episode. The crew of the Enterprise showed up and met new life in a new civilization — and depending on how that meeting went, they would either fight the new aliens or Captain Kirk would date their Queen.

It was way ahead of its time, given that it was a show about space exploration that debuted on television three-years before mankind had ever so much as set foot on the moon.

In the present day we are much closer to living “Star Trek” than we were — though probably not as close as the average Star Trek fan would like.  We’ve made it to the moon, but not Mars — and the space shuttle isn’t even running anymore.

Luckily, are we living a world where some “Star Trek” fans have other options for getting to space than waiting for a ride from NASA.  Specifically Jeff Bezos, Blue Origin founder (and also the CEO of some eCommerce company, we hear) had repeated often in interviews that a childhood spent watching “Star Trek” and reading science fiction was what propelled him to start his own space exploration company, and self-fund it to the tune of $1 billion a year.

And while Jeff Bezos is currently the only billionaire Trekkie looking to boldly go nowhere no one has gone before, he is not the only billionaire in the game or promising to have consumer passengers launched into space by the end of the year. Sir Richard Branson, founder of Virgin Galactic, also has flights for customers on the agenda of greatness for 2019. Elon Musk, on the other hand, will not be doing quick commercial visits to space in 2019 with SpaceX. He will, however, be giving some NASA astronauts a lift to the space station this summer.

Oh, and he has high hopes for getting tourists to Mars by the year 2024.

And if at this moment you find yourself thinking, “oh billionaire boys and their toys, how cute they’re playing spacemen,” well, we can’t entirely blame you. We read Elon Musk’s Twitter feed, too.

But it this week it is notable that the rocket builders aren’t the only ones stoked for the future of commercial space travel. The team at UBS also sees a big opportunity, a huge swath of revenue waiting to be earned — and the possible end of the ten-hour-long international flight.

 

To Infinity And Beyond … Then Back In Under 40 Minutes

The appeal of strapping oneself into a rocket and launching into the outer atmosphere and beyond may not be immediately appealing to most, particularly if exploring the outer reaches of the cosmos has not been a lifelong dream. But, as UBS noted in a report released earlier this week, most space tourism isn’t going to be about getting to the stars or Mars, so much as it will be about getting from point A to point B on planet Earth a lot faster than in currently possible.

SpaceX’s massive Starship rocket, for example, can fly 100 people around the world in a few minutes.  To take off in New York, travel and land in Shanghai is — door-to-door — a 39 minute trip, according to SpaceX.  By airplane the trip is 15 hours.

Sign us up.

And according to UBS, the siren song of superspeed travel will eventually add up to a $20 billion industry that will compete with traditional long-haul air travel.  And space tourism — the bold goers who want to frolic among the stars? UBS estimates that will be a $3 billion industry.

“While space tourism is still at a nascent phase, we think that as technology becomes proven, and the cost falls due to technology and competition, space tourism will become more mainstream,” UBS analysts Jarrod Castle and Myles Walton wrote in the note. “Space tourism could be the stepping stone for the development of long-haul travel on earth serviced by space.”

All in all, according to UBS, the space industry today is worth around $400 million — which it anticipates will double to $800 million by the year 2030.  The space travel and tourism sub-sectors, they noted, will be a small sub-segment, but an important one.

Private space companies “are investing aggressively across the space opportunity,” UBS said, and the firm believes access to space “is the enabler to broader opportunities for investment.”

Long-haul airplane flights of over ten hours, the report noted, could easily “be cannibalized” by point-to-point flights on rockets. Given that about 150 million passengers a year fly routes even longer than ten hours, UBS estimates that if even an average of 5 percent of those flights were instead serviced by spaceships, “the revenue opportunity as of today would be more than $20 billion per year.”

“Although some might view the potential to use space to service the long-haul travel market as science fiction, we think … there is a large market,” UBS said.

Moreover, the firm noted, it thinks $20 billion might be underselling the potential some.  Though commercial airlines average 300 seats while rockets in the immediate future max out at 100, given the short duration of the rocket flights, space operators could conceivably make up for the smaller vessels with more trips. And, more than 10 percent of people in a recent UBS survey said they would choose a spacecraft over an aircraft for long-distance travel, doubling the 5 percent estimate the study actually used.

“While the timing of such a long-haul service is uncertain, we think our base-case assumptions are conservative,” UBS said.

But there is a bit of a gap between being “interested” in space travel — as that group literally includes ever elementary school student on the planet — and being able to afford to blast off for leisure.

A really big gap.

 

When Six Figures Is A Cheap Flight

Space travel for tourists isn’t totally unheard of today — seven tourists have flown to space courtesy of the Russian Soyuz rockets — it is just incredibly uncommon because it is prohibitively expensive. It costs about $20 million for a Russian space flight.

The good news is the price is coming down.  The bad news is that cheaper and cheap aren’t the same.

If one wants to fly with Virgin Galactic later this year, for example, the price of the ticket is $250,000. And you won’t even really get to space — the Virgin Galactic craft still technically comes in below the Kármán line, the invisible boundary between Earth’s atmosphere and space. It doesn’t seem to matter too much to potential passengers, who have formed a 600 person waiting list for their chance at a ride.

If one is looking to save $50,000 — and actually cross the  Kármán line — Blue Origin has a ticket for you, though whether it actually makes it off the ground by the end of 2019 remains to be seen.  Also the Blue Origin rocket goes past the literal boundaries of Earth’s atmosphere by shooting passengers straight up into space at Mach 3, so prep for an intense takeoff.

As both Virgin Galactic and Blue Origin utilize reusable spacecraft systems, UBS believes the companies will be able to make space tourism “a more common occurrence” by lowering prices.

“We estimate space tourism will be a $3 [billion plus per year] opportunity growing at double digit-rates,” UBS said. “This would be similar to what happened in commercial aviation, especially after the rise of low-cost airlines.”

Space X pricing is a little bit less clear because they aren’t planning orbital flight offering for consumers.  They are charging NASA $58 million per person to deliver two astronauts to the U.S. space station — but those guys do pack kinda heavily.  And SpaceX is offering a good deal to NASA — the Russians charge over $80 million to give U.S. astronauts a lift.

And SpaceX is also planning some stuff for tourists — albeit slightly more ambitious than just escaping the atmosphere, floating around for a few minutes and coming back.

The firm recently announced that Japanese billionaire Yusaku Maezawa signed with SpaceX to fly around the moon on Starship. Maezawa expects to fly in 2023, with six to eight guests.

“Ever since I was a kid, I have loved the moon. It’s always there and continues to inspire humanity,” said Maezawa, who made his fortune as the founder of online retailers Start Today and Zozotown.

It is unknown exactly what Maezawa has paid for the privilege of being SpaceX’s first commercial passenger, with Elon Musk only confirming “he’s paying a very significant amount of money.”

“To be clear. This is dangerous … it’s not a sure thing … there are some chances things could go wrong,” Musk reiterated.

A series of phrases, we would like to note, that no one has ever heard upon booking a vacation to Disney World.

But then, even Disney can’t promise to take you to the actual literal moon, and if Elon Musk pulls it off with SpaceX, we imagine he’d have one very satisfied billionaire customer evangelizing to the entire world about the wonders of space tourism.

But of course, as if often the case with getting to the moon and back safely, it’s much easier to talk a good game than actually get the job done. And even doing it once or twice correctly is no guarantee that it will always go right.  Ask NASA about Apollo 13. It took people a while to feel safe on airplanes, and some still don’t. We imagine rockets will always be a bridge too far for some consumers.

And even for those who aren’t opposed to rockets, the price point would have to fall by orders of magnitude before amateur space exploration will be for anyone but the extremely wealthy.

But maybe UBS is right, and the technology will all fall into place — and popularity will breed scale, which will breed cost reductions, which will breed more customers, which will make more scale, etc. The Concorde and its three-hours trips to Europe from New York was a popular way to travel — until it was shut down.

It could happen — we all talk to voice-activated personal assistants today, and in the year 2000 that was sci-fi tech only available to characters in Marvel Universe superhero movies.

In which case, space will no longer be where voyagers boldly go where no one has gone before.

It will be where families boldly go when school lets out and it’s time to go on vacation.

 

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